How Aussie Retailers are Surviving the Arrival of Amazon

After a slow Christmas, retail businesses across Australia brace for 2019. Investing in efficient and fast-implemented technology seems to be the trending solution to aid the highly competitive retail industry.

With increasing adoption of Google Home, Apple’s Siri and now Amazon’s Alexa, artificial intelligence makes decisions for consumers. “Hey Google, order milk”, yet Australian retailers aren’t ready to scale to the level of service offered by Amazon’s Alexa.

“Don’t wait for the consumer to come to your milk shop, take your milk to the customer where and when they want it.” says Paula Dootson from ABC.

PWC in their Q1 2018-219 survey report says that half of the consumers (51 per cent) turned to innovative retail technology like ‘Click-and-Collect’ and ‘buy now, pay later’. Only 44% shopped at bricks-and-mortar stores weekly. 46 per cent of respondents stated mobile payment is their preferred method when purchasing in-store. Mobile sales became the dominant force for Black Friday, mobile sales for 2017 were up 112 per cent. To succeed, retailers need to invest in technology to integrate with Internet of Things devices, and shift to a proactive approach to customer needs.

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Shoppers turned to innovative technologies.

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Shoppers use brick-and-mortar stores weekly.

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Shoppers prefer mobile payment methods.

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Mobile sales growth on Black Friday 2017.

How Amazon Survived 2018

Amazon, the American retail giant, is the largest online retail business in the world. Its reported an annual revenue in 2018 of $135.99 billion USD – twice the combined revenue of its nearest competitors; JD.com, Alibaba and eBay. The arrival of Amazon was major wake up call to the local Aussie retail market. A Commonwealth Bank survey found that 41% of businesses saw Amazon as a threat – and it’s no surprise; while Amazon is not only the biggest retailer on the earth – it’s also larger than most of our own retailers combined.

2018 was a challenging year for Amazon says Claire Webber strategist from MercelBell, even with the strong push of the budget they bring from the US, 2018 was a slow burn. But 2019 will, unsurprisingly, see Amazon growing. Amazon Australia is now undercutting the dominant supermarket chains by as much as 50 per cent on household staples.

Consulting firm Bain & Company predicts that Amazon could become Australia’s sixth largest retailer by 2022, this thanks to their vast omni-channel experience along with their strategies setting the bar in terms of price and convenience. Amazon is winning customer’s hearts and minds with their seamless buyer experience and convenience in price and delivery.

Aussie Retailers Are Not Winning The Price War

While there’s no reason that smaller, independent businesses can’t thrive, it’s JB Hi-Fi, Harvey Norman, Myer and David Jones that are in the firing line.

Scott Kilmartin, producer of documentary ‘David vs Amazon’, explains “globally, these are the type of businesses that Amazon has a huge impact on. Businesses have to focus on their customer and what they want rather than trying to compete on price.”

The arrival has no doubt caused plenty of headaches for retailers’ management teams and investors across the country. Amazon’s dominance is drawing shoppers away from traditional brick-and-mortar stores to Amazon’s online store. Amazon’s Online Local Fashion Store, houses more than 150 Australian fashion brands including Sol Sana, Finders Keepers, Lorna Jane, Cooper St, Oroton, Tony Bianco, and many others.

One of Amazon’s draw-cards is that it offers lower prices than other retail stores and eCommerce sites. However, for Aussie businesses, a price war is not the strategy to take. Aside from low prices and a wide variety of products, one other factor that attracts so many individuals to Amazon is their fast and cheap delivery options. This is where competitors, like JB Hi-Fi, are trying to compete. Having already launched a speedy same day delivery plan for online customers, and in some cases, delivery within three hours, they’re upping their game to make their omni-channel experience more appealing.

What Does the Future Look Like?

According to ABS, a faint hope lurks in the horizon for the retail industry, as sales closed up by 0.4% ($27.1 billion) in November, beating all expectations. This push mostly driven by Black Friday and Cyber Monday sales, narrowed again during December, with shoppers spending less on the Christmas season. Commonwealth Bank card data revealed a 3.7% decline in spending and Citi researchers tracked a 9% decline in foot traffic between Black Friday and Boxing Day, a slow year is to be expected but there’s room for innovation and differentiation.

We’re experiencing a wave of smaller, innovative Aussie companies who are making their push to take on established industry giants. While Amazon is putting pressure on some of our household named brands, nearly half of younger consumers (41.8%), said they would switch brands if presented with a poor buying experience – so if retailers pay attention to their customers and remain innovative and transparent, they should be able to respond directly. For Aussie businesses, a business management system like NetSuite for Retail can give them the competitive edge they need to build up a great customer journey.

With thousands of successful implementations, NetSuite has a deep understanding of the retail businesses in Australia and the many challenges they face. Leveraging this experience, NetSuite introduced SuiteSuccess to Australia, a new methodology for customers to succeed as their scale their businesses, fast. Here is how it works:

The first step ensures retailers have a single view of customers, orders, items and inventory. A real-time platform with all the channels operating from a unified base.

Once they have laid the foundation, retailers add eCommerce and other Omni-Channel capabilities that enhance and build up greater customer experience.

Freed from the constraints of their legacy systems, businesses can tackle greater challenges such as a lack of visibility or inefficiencies in their supply chain.

Ultimately, they can focus on more innovative and disruptive strategies such as pricing and margin management and business intelligence.

Download NetSuite Guide for Retail and eCommerce

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